Question:

I am a 20-year-old apprentice mechanic, a member of KiwiSaver and have a term investment of $10,000 coming due next month. I do not need access to the cash in the short- to mid-term, but with term investment interest so low I am unsure whether to leave it in the bank for a bonded period, put the money into the sharemarket, or invest in assets that I would pick to appreciate (for example, a classic vehicle). I would be grateful for any advice you can give me.

Answer:

Mary Holm: It probably doesn't matter much which investment you choose. Assuming you saved the $10,000 from your pay, you've already done really well financially on an apprentice's income. Keep up those habits, and you'll be a wealthy man anyway.

Still, let's do the best we can for you. You've got time on your side, so you're in a position to invest in something volatile in the anticipation that over the long run it will probably perform well.

I don't know anything about the classic car market, and I suggest you stay out of it unless you do - or you can get advice from somebody you trust who is not a salesperson. Investing successfully in art, collectibles or anything like that takes knowledge. Those who know often make money from the dabblers who don't.

Shares are different. Because of the way the sharemarket works, an amateur can often do as well as the experts by investing in a well-diversified share fund.

If you're not in the know about cars, then the sensible answer may be shares. Nobody knows if this is a good time to buy shares, but if you put, say, a third of your money in a share fund now, a third in a year, and a third in two years - leaving the rest in the bank in the meantime - you should end up buying at least some at good prices.

Then again, you would probably get more fun from a car. And given your good savings habit, I don't see why fun shouldn't win the day.

Mary Holm is the author of bestselling books on KiwiSaver and personal finance. She is also a highly praised seminar presenter. Her written advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following that advice.